Perspectives on High Real Interest Rates in Turkey

Kannan, Prakash

doi:10.2139/ssrn.1290769

Cited by 2 publications

(2 citation statements)

References 45 publications

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“…For instance, the private and public external debt levels in relation to GNP between 2001 and 2005 almost halved and came down to 47.5 per cent (Dufour & Orhangazi, 2009, p. 206 respectively, in a significantly disinflationary environment the ISE proved to be a good investment venue relative to fixed income securities; a reversal of the 1990s, which offered investors risk-free real interest rates above 30 per cent (Yildirim, 1996). The post-200-01 period's real rates have been more than halved and have recently come down to single figures (Kannan, 2008). The ISE 100 index-and government-bill returns over the last decade can be found in Table 2 …”

Section: Then Buy That and By The Way What Is A Ceiling And What Doementioning

confidence: 99%

Two Waves of Globalization in the Istanbul Stock Exchange since 1985 and the Evolution of the Domestic Retail Investor

Tarim

2010

Competition & Change

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This paper reviews the quarter century of the Istanbul Stock Exchange (ISE) since its opening in 1985. The review focuses on the ISE's articulation to the global financial system in two different macro-economic modalities in the 1990s and the new millennium and its repercussions for domestic retail investors (DRIs). It is argued that macroeconomic business cycles and inadequate institutionalization of the ISE in the 1990s and early 2000s have generated a domestic investor profile which is short-termist, opportunistic and relatively ill-informed about the markets in general and fundamentals of equity investment in particular. The post-2000-01 crisis period has structurally transformed the Turkish economy and boosted the ISE's performance with a new wave of global institutional investor interest. Despite these positive changes, the domestic retail investor profile of the 1990s has largely remained the same in the present decade but with positive aggregate market returns for domestic investors and better and more democratic access to market information and knowledge.

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Section: Then Buy That and By The Way What Is A Ceiling And What Doementioning

confidence: 99%

Two Waves of Globalization in the Istanbul Stock Exchange since 1985 and the Evolution of the Domestic Retail Investor

Tarim

2010

Competition & Change

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“…Following Kannan (2008) and Khakimov et.al. (2010), we set 10 per cent real interest rate as the long-run real interest rate for Turkey.…”

Section: Definition Of Taylor Rule Gapmentioning

confidence: 94%

An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey

Özşuca¹,

Akbostancı

2015

Emerging Markets Finance and Trade

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The mechanism by which monetary policy affects financial institutions' risk perception and/or tolerance has been called the 'risk-taking channel' of monetary policy. It has been recently argued that periods of low interest rates due to expansionary monetary policy, might induce an increase in bank risk-appetite and risk-taking behavior. This paper investigates the bank specific characteristics of risk-taking behavior of the Turkish banking sector as well as the existence of risk taking channel of monetary policy in Turkey. Using bank level quarterly data over the period 2002-2012 a dynamic panel model is estimated. Our sample accounts for 53 banks that have been active in Turkey during the period. To deal with the potential endogeneity between risk and bank specific characteristics, which are explanatory variables in our model, the GMM estimator proposed by Arellano and Bover (1995) and Blundell and Bond (1998) is used. Four alternative risk measures are used in the analysis; three accountingbased risk indicators and a market-based indicator-Expected Default Frequency. We find evidence that low levels of interest rates have a positive impact on banks' risk-taking behavior for all the risk measures. Specifically, low short term interest rates reduce the risk of outstanding loans; however short term interest rates below a theoretical benchmark increase risk-taking of banks. This result holds for macroeconomic controls as well. Furthermore, in terms of bank specific characteristics, our analysis suggests that large, liquid and wellcapitalized banks are less prone to risk-taking.

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Perspectives on High Real Interest Rates in Turkey

Cited by 2 publications

References 45 publications

Two Waves of Globalization in the Istanbul Stock Exchange since 1985 and the Evolution of the Domestic Retail Investor

Two Waves of Globalization in the Istanbul Stock Exchange since 1985 and the Evolution of the Domestic Retail Investor

An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey

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